India, Mexico may start discussion on trade deal
Mexican lawmakers approved up to 50% tariffs on imports from countries with which the country does not have preferential trade ties, effective January 2026
India and Mexico may consider launching formal bilateral trade negotiations that would help to ringfence Indian goods from proposed high Mexican tariffs on shipments from countries that do not have any preferential trade ties with the North American country, people in the know said.
The high tariffs on Indian goods are an unintended fallout of Mexico’s move, which is actually aimed at curbing imports from China, the nation’s second largest source of imports after the US with over $130 billion in annual shipments, these people said, requesting anonymity. In comparison, India’s merchandise exports to Mexico in 2024-25 were worth less than $6 billion.
On Wednesday, Mexican lawmakers approved up to 50% tariffs on imports from countries with which the country does not have preferential trade ties, effective January 2026. It will impact most Asian economies such as China, India, South Korea, Thailand and Indonesia. The Mexican move is more to placate the Trump administration that accuses the country of rerouting (trans-shipment) of Chinese goods to the US, the people quoted abovesaid. The Mexican government, however, justified its tariff move on the ground of supporting its local manufacturing.
India and Mexico have been engaged on this matter after Mexican President Claudia Sheinbaum proposed the tariffs in September this year. At a meeting last week, India’s commerce secretary Rajesh Agrawal and Mexico’s undersecretary of foreign trade Luis Rosendo Gutiérrez Romano considered launching a bilateral trade negotiation that may provide temporary exemption to Indian shipments from the proposed high tariffs, the people cited above said.
“Mexico is also keen to avoid any trade dispute with India as New Delhi can exercise its right to take appropriate measures to protect its national interest. A permanent solution is to have a bilateral trade agreement, which may take some time. However, imminent imposition of tariffs could be avoided if the two countries announce the launch of their trade negotiations in the next two weeks,” one of them said.
While the move of the Mexican government would impact 1,463 tariff lines, the revised levies would range from 5% and 50%, with most products expected to face duties around 35%. The move will adversely impact key Indian exports to Mexico such as automobiles, auto parts, pharmaceuticals, engineering goods and chemical products. Crude oil from Mexico is India’s largest import from Mexico. Other items include gold and gold jewellery, chemical compounds and telephone machinery.
“It is premature to determine the impact of the Mexican tariff move. The actual impact on Indian exports will depend on the criticality of Indian exports to domestic supply chains in Mexico and ability of Indian companies to secure exemptions or pass on the tariff cost to the Mexican consumers,” a second person said. India exported goods worth $5.75 billion in 2024-25 and imported items worth $2.87 billion in that financial year.
Experts said the Mexican move is likely to disrupt established supply chains in Mexico, affecting its exports. Saurabh Agarwal, tax partner at EY India said the development will present a “strategic opportunity” to India as a nation focused on becoming a reliable manufacturing hub. “It’s important that we leverage our PLI (Production Linked Incentive) schemes and rapidly improve our logistics and ease of doing business. The world is looking for a trusted, supply chain partner; this moment of volatility can convert into a multi-year advantage for ‘Make in India.’ This is one such challenge which can help in accelerating our global exports footprint,” he added.
